When a taxpayer tells ATO about a false or misleading statement they’ve made or a change that increases their tax or reduces their credits – and they do so with no prompting, persuasion or compulsion on our part – ATO generally refer to it as a ‘voluntary disclosure’.
A voluntary disclosure may allow you to correct your tax affairs if, for example, you have not disclosed income that you know you should have, claimed deductions you know you weren’t allowed to, or made other statements in relation to your affairs that you know were false or misleading.
If you make a voluntary disclosure you can usually expect a reduction in the administrative penalties and interest charges that would normally apply.
Any such reduction depends on when you inform ATO about the correction. Generally, the reduction is greater if you make the leak before ATO notify you of an examination. You’ll have to pay any tax you owe and may have to ask us for any interest concessions. If you make a voluntary disclosure you can usually expect a reduction in the administrative penalties and interest charges that would normally apply. (Administrative penalties are those we may impose without taking court action.)
A correction that increases your tax (or reduces your credits) creates a tax shortfall. We may impose an interest charge on the shortfall. For shortfalls that are the result of a voluntary disclosure, we may decrease the interest charge (unless the law prevents us from doing so).
The amount of any reduction depends on when you tell us about the correction. Usually, the reduction is greater if you make the disclosure before we inform you of an examination.